False Truths?

This is from the forthcoming issue of Perspective Magazine. It’s the continuation of my article ‘Waiting for a Priest’ which is here on my profile somewhere.??

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As we saw in part 1 (Waiting for a Priest) Ignaz Semmelweis conquered the terrible maternal childbed in the Vienna General Hospital by the careful examination of rival theories. He tested each theory by seeing if its predictions proved accurate.?

(Incidentally, although I talk of? a theory’s predictions, I could just have easily used the word ‘implications’ instead. In this context they mean the same thing.)

The psychological theory carried the prediction that keeping a priest off the ward would reduce the death rate. It did not.

The theory had been ‘falsified’.

The Cadaravic Matter theory predicted that if students washed their hands before going onto the ward, the death rate would fall. This proved to be the case. This theory was ‘confirmed’ or ‘corroborated’ or, in less cautious language ‘proved’.

But watch out, hidden dangers lurk here.

There’s a fundamental assumption that permeates our thinking on these matters, and that assumption is incorrect.

What is it??

It’s the assumption that a correct theory will always produce accurate predictions.

And, on the other hand, that an incorrect theory will always produce incorrect predictions.?

This is the natural way to think. It’s rooted in our everyday experience … where it usually works.?

However, once we enter a complex system…such as the economy…we have to be very careful.?In a complex system a false theory can produce accurate predictions, and a true theory can produce predictions which fail.

In fact, the system doesn’t even need to be very complex.

Back to Vienna…

In an attempt to explain the maternal mortality rate, it would have been perfectly reasonable for someone to put forward a theory that there was something toxic in the building materials used to build the ward.?

What would this theory predict?

For one thing, that relocating the ward to a new, non-toxic space would reduce maternal mortality. Ok, let’s say the hospital authorities agree to find a new space for the ward. If the new space happened to be on the other side of the hospital… a long way from the morgue… an accidental and apparently insignificant consequence would be that the students would be far less likely to go straight from an autopsy to the maternity ward.?

What would happen next?

Maternal mortality rates would fall back towards normal levels… precisely what the Toxic Materials theory had predicted.?The theory would seem to have been corroborated; the science would be, as they say, settled.

No doubt vast sums would be spent on the fruitless search for non-existent toxins in the walls of the old ward. The theory, however, would almost certainly remain in place; it seemed to have solved such a major problem that it wouldn’t easily be let go.

Just imagine the tortuous process that would be required from this point to unearth the correct theory.?

A consensus around a falsity is a very powerful barrier to truth.

Economics, and economic policy are no different: if the predictions of a theory come true, we tend to applaud the policy and see its underlying theory as correct, and why shouldn’t we? What else do we have to go on? Is any policymaker or politician going to choose a theory based on, say, its internal logical consistency rather than the results it seems to produce? Of course not.?

How about a correct theory producing an incorrect prediction, is that possible?

It is.?

Semmelweis’ work marked a crucial stage in the development of the germ theory of disease. However, just like everybody else at the time, he had no concept of microbes or bacteria.?

With that in mind, imagine if the night before the new hand-washing regime began, a forgetful student happened to leave a contaminated item on the Ward. Let’s say the item was so contaminated, it was able to act as a locus for infection. Then, despite the new cleansing routine, the students would be reinfected when they entered the ward.?

In these circumstances, the maternal mortality rate would not go down after the implementation of Semmelweis’ procedures. The cadaveric matter theory, though correct, would seem unambiguously to have been refuted.?

It predicted that if the students washed their hands before going onto the ward, the death rate would fall. The students did as they were told, but the death rate remained the same.

When the predictions of a correct theory fail, the reason is always down to some extraneous circumstance that got in the way, and in the economy there’s a new extraneous circumstance every day.?

Sometimes, these are easy to identify, but sometimes they aren’t. And even when they are easy to identify, it’s always going to be politically expedient for someone to pretend otherwise.?

Here is an analogy for the problem faced by economic policy (and economic theory): imagine, just after the newly cleansed students entered the ward, there was a structural collapse which resulted in the death of every patient. Do you think people would say: “See what all your handwashing has achieved!”?

That would be ridiculous, wouldn’t it??

Yet that’s exactly what happens all the time in economics. An extraneous event derails a policy and everyone cries from the rooftops “Look, your stupid policy has caused suffering to real people.”?

In summation, the vital, and I think often counter-intuitive, point is that a false theory can produce correct predictions, and the correct theory can predict events which don’t happen. The trouble is that there’s absolutely no way to be certain. However, I’m not advocating some kind of epistemic nihilism, merely caution. Certainty can be very dangerous.?